CORRECTED-Chipotle's shares drop after latest food safety incident

Reuters Staff

2 Min Read

(Corrects to “Dec. 31” from “Jan. 31” in paragraph 5. This story was earlier corrected to show that E.coli outbreak linked to Chipotle was found in 10 states, not 14.)

March 9 (Reuters) - Shares of Chipotle Mexican Grill Inc fell almost 6 percent in morning trading on Wednesday, a day after the popular burrito chain operator said it would temporarily shut a Massachusetts restaurant after four employees fell sick.

Chipotle is trying to repair its reputation after a series of food-safety incidents, including two E.coli outbreaks that sickened about 50 people in 10 states and two separate norovirus outbreaks in Massachusetts and California.

“We suspect that investors and consumers will be sensitive to this announcement, particularly in light of the adverse news flow over the last six months at Chipotle,” CRT Capital analyst Lynne Collier said in note to clients.

“The publicity around this news announcement will be another negative data-point that may affect consumer demand.”

Chipotle’s sales have fallen sharply since the E.coli outbreaks late last year. Sales in the quarter ended Dec. 31 were down 18 percent compared with the third quarter.

The restaurant hit by the latest food scare, in the town of Billerica, outside Boston, was closed for a full cleaning, company spokesman Chris Arnold said on Tuesday.

No customer illnesses were reported, he said.

The company did not immediately respond to requests for comment or additional information on Wednesday.

Chipotle temporarily closed all of its U.S. restaurants on Feb. 8 during prime lunchtime hours to hold staff meetings on food safety.

Up to Tuesday’s close of $524.69, the company’s stock had fallen about 18 percent since the first E.coli outbreak was reported on Oct. 31. (Reporting by Subrat Patnaik in Bengaluru; Editing by Ted Kerr)